Searching For The Best Penny Stocks To Buy Now? Take A Look At Unusual Options Activity
Do you want to find the best penny stocks to buy this week? While it’s short, there are still plenty of clues to look for if you’re building your watch list. Today we look at clues from the options market. This might seem confusing if you’re new to researching penny stocks to buy using alternative data. Why would anyone use options activity to formulate a trading strategy?
Does call-buying always mean an uptrend is coming? Does put-buying suggest a pullback is on the way? No, but some traders use unusual options activity in their research process to formulate a trading thesis to support or go against their approach to buying (or avoiding) certain stocks.
In many cases, higher levels of Call buying usually prompt a bullish tone, and Puts do the opposite. At the very least, these are prompts to take a deeper look at what could be a reason for the irregularity. A trader can then determine if the general retail market has “missed” something, in which case, if they feel that it’s worth it, that trader can choose a proper trading strategy to capitalize. This article continues our update 7 Top Penny Stocks With Unusual Options Activity, Time To Buy?
Penny Stocks To Watch With Unusual Options Action
SoFi Technologies Inc. (NASDAQ: SOFI)
Shares of digital financial services company SoFi Technologies has faced plenty of headwinds in the stock market this year. From extensions of student loan forgiveness plans and the latest cryptocurrency industry meltdown, it makes sense why SOFI stock has slid so deeply into the penny stock range.
But do the positives outweigh the negatives at this point? Considering SOFI stock is trading just above its all-time lows, some appear to have grown bullish based on the recent options activity. In particular, the December 16th options chain includes a significantly higher level of open interest in Call contracts with higher volume in the $6 strikes. As of this article, over 1,800 were traded. Earlier this week, the company subdued concerns over its exposure to digital currencies. In an 8-K, SoFi explained that “cryptocurrency remains a non-material component” of its business.
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Looking ahead, past broader catalysts like the crypto meltdown, SoFi has some things to keep track of. November 30th will see the company participate in fireside chats at the Credit Suisse Technology Conference.
Qurate Retail Inc. (NASDAQ: QRTEA)
The retail brand company Qurate Retail has gotten some attention from one of the most unassuming places. Michael Burry, of “Big Short” fame, has prompted traders to take a closer look at the company. It owns brands like QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill, and Grandin Road. Its video commerce – Commerce – is relatively uncontested based on the brands it owns. The retailer reaches more than 200 million homes across multiple TV channels on via social media & live-streaming platforms.
So, where does a famed short-seller come into the picture? Burry has been relatively quiet in his investments throughout the year. But what’s interesting is that he’s taken a liking to Qurate. You might recall Burry was one of the early watchers of GameStop Shares while it was still trading as a penny stock long before the “Ape movement” was created. You can read more about this in our article “Penny Stocks To Buy Or Sell In September: GameStop (GME)” when, at the time, Burry reported a measly 3% stake in GME stock.
Fast-forward and QRTEA is now on the list. At the end of the third quarter, Burry’s Scion Asset Management showed a 5 million share stake in the HSN, QVC stock. Other notable firms holding shares include Point72 Hong Kong, Dupont Capital Management, and Renaissance Technologies LLC. Where IS the notable options action? Look at the December 16th $2 Calls. More than 2,700 contracts were traded compared to just 1,632 Open Interest.
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Transocean Limited (NYSE: RIG)
Despite the last week and a half of oil prices pulling back, Tuesday saw a surge in crude prices back above the $80 mark. With that, oil and gas stocks have come back into focus. Transocean, for example, saw a similar move, with RIG stock bouncing back above the $4.20 level. What’s interesting about Transocean is that it was already on the radar this month, thanks to options activity. In the article, Best Penny Stocks To Buy? 3 With Unusual Options Activity Today, we discussed RIG stock in more detail.
In particular, some bullishness came after its latest financial results. Transocean posted an earnings and sales beat for the third quarter. EPS came in at a loss per share of 4 cents compared to estimates of a loss per share of 18 cents. In addition, sales were reported at $691 million compared to estimates of $666.67 million. It was also able to narrow its adjusted loss for the quarter.
“We remain encouraged by the sustained strength in the offshore drilling market globally and expect demand for the increasingly scarce high-capability drilling rigs Transocean owns and operates to remain strong for the foreseeable future, resulting in higher utilization and dayrates,” explained CEO Jeremy Thigpen in Transocean’s earning update.
The bulk (no pun intended) of RIG stock’s options volume is in next February’s expiration. More than 22,700 contracts traded in the Feb. 17 $5 strike Calls compared to a little more than 2,300 Open Interest.
This action comes shortly after Transocean announced that one of its subsidiaries, along with Perestroika A.S. and funds managed by Lime Rock Management L.P., formed a joint venture, Liquila Ventures Ltd.
Liquila agreed with Daewoo Shipbuilding & Marine Engineering Co., Ltd. to buy Hull 3623 for approximately $200 million. Hull 3623 is an ultra-deepwater newbuild drillship formerly known as West Aquila. Transocean has made a $15 million noncontrolling investment in Liquila.
List Of Penny Stocks With Unusual Options Activity
- SoFi Technologies Inc. (NASDAQ: SOFI)
- Qurate Retail Inc. (NASDAQ: QRTEA)
- Transocean Limited (NYSE: RIG)
- Amyris Inc. (NASDAQ: AMRS)
- Nordic American Tankers Ltd. (NYSE: NAT)
- Ginkgo Bioworks Holdings Inc. (NYSE: DNA)
- Viking Therapeutics (NASDAQ: VKTX)
- Canopy Growth Corporation (NASDAQ: CGC)
- Agenus Inc. (NASDAQ: AGEN)
- Globalstar Inc. (NYSEAMERICAN: GSAT)
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